European and US equity futures fell on Thursday after Nvidia Corp.’s earnings outlook fell short of the highest expectations, dampening the global AI-driven stock rally. Contracts for the Euro Stoxx 50 declined by 0.2%, and futures for the Nasdaq 100 Index dropped 0.5%. An Asian equity benchmark also slipped 0.2%, with semiconductor giants Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. contributing significantly to the decline. Nvidia’s stock plummeted over 8% in after-hours trading.
Nvidia’s weaker-than-expected sales forecast could temper the AI enthusiasm that has buoyed global tech stocks throughout the year. As investors digest these earnings, attention will likely shift to upcoming US economic data, including personal consumption and weekly jobless claims, which could influence expectations for Federal Reserve policy adjustments later this year.
Joshua Crabb, head of Asia Pacific equities at Robeco Hong Kong Ltd., commented on Nvidia’s results, saying, “Expectations were extremely high, and this was bound to happen sooner or later. The AI sector may face a tougher day.”
US Treasury yields on 10-year notes held steady after a rise of one basis point to 3.84% in the previous session. The dollar edged lower following a broad gain as investors engaged in portfolio rebalancing.
Market participants are assessing the likelihood of US interest rate cuts, especially after Fed Bank of Atlanta President Raphael Bostic suggested it “may be time to cut” rates, though he awaits further data before making a decision on potential rate reductions next month.
The New Zealand dollar strengthened following a significant boost in business confidence, reaching a 10-year high. In Japan, a sale of two-year government bonds saw the highest bid-cover ratio since 2019, driven by recent increases in yields that attracted investors.
China’s economic outlook continued to darken, with shares of electric vehicle maker Li Auto Inc. falling by up to 15% after missing earnings estimates. BYD Co. also saw its stock decline despite a 33% increase in profits. Additionally, UBS Group AG downgraded its growth forecast for China for this year and next, citing a more severe property market downturn than anticipated.
Despite Nvidia’s disappointing guidance, the company reported a revenue surge of more than 100% to $30 billion for the fiscal second quarter ending July 28. The board also approved an additional $50 billion in stock buybacks.
In commodities, oil prices stabilized after a two-day decline, balancing losses in the stock market with a drawdown in US stockpiles and supply disruptions in Libya. Gold remained just below its record high, on track for a monthly gain.
